China’s antitrust crackdown signals a new era of regulatory scrutiny in the country and threatens to end the days when products from Audi sedans to Starbucks lattes generate fatter profits in Beijing than in London or New York.

The probes, combined with signs the government is shunning some U.S. technology companies for security reasons, have left foreign businesses struggling to figure out the evolving laws and regulations in the world’s most populous country. Those seeking to adapt face the challenge of interpreting vague rules in an economy that’s no longer as reliant on foreign investment as in past decades.

“We may be seeing a paradigm shift where the rules of the game are changing,” said David Loevinger, former U.S. Treasury Department senior coordinator for China affairs and now an analyst at TCW Group Inc. in Los Angeles. “Until people figure out the new rules it will create a much more uncertain business climate.”

Spare parts

Volkswagen AG’s Audi, Bayerische Motoren Werke AG, Daimler AG’s Mercedes-Benz, Tata Motors Ltd. (TTMT)’s Jaguar Land Rover, Fiat SpA (F)’s Chrysler, Toyota Motor Corp. (7203) and Honda Motor Co. (7267) have announced price cuts of vehicles or spare parts since July in the wake of an investigation by China’s National Development and Reform Commission into more than a dozen automakers.

The NDRC, China’s main economic planner, takes primary responsibility for oversight of pricing and is one of three government bodies that enforce the nation’s antitrust laws.

An official at a global luxury-car maker in China, who asked not to be identified, said the government stepped up pressure on foreign automakers after state broadcaster China Central Television late last year criticized imported cars for being more expensive in China than in other markets.

Chinese state media also pointed at how spare parts could trump the cost of a new car. For example, replacing all the parts of a Mercedes C-class sedan can cost 12 times the price of a brand new model, according to an April report by the Insurance Association of China and China Auto Maintenance & Repair Association.

“There’s a concerted effort on the part of multiple regulators in China to aggressively enforce the regulations,” said Kent Kedl, managing director for Greater China and North Asia at Control Risks Group Holdings Ltd. “They are being much more aggressive now than we have ever seen.”

Lucrative coffee

For Volkswagen, China is so profitable that its earnings there, along with those of Audi, generate all of its cash flow, according to estimates by Max Warburton, an analyst at Sanford C. Bernstein, in November.

Beyond cars, Starbucks Corp. (SBUX) generates operating margins of 35 percent in its China/Asia Pacific region, higher than Europe’s 9 percent and the 24 percent in the Americas. Drugmakers have generally seen higher profit margins in China than in Europe, though that’s changed for some companies last year, according to Philippe Lanone, a Paris-based analyst at Natixis Securities.

Li Pumin, a spokesman for NDRC, told reporters on Aug. 6 that the investigation was aimed at maintaining market order and protecting consumers.

Besides the NDRC, the State Administration for Industry and Commerce said last month it began probing whether Microsoft’s Windows operating system and Office software violate China’s anti-monopoly law.

Probe beneficiaries

Some have benefited. Control Risks, which specializes in providing political and security advice, has seen a doubling of its business in the past year as more clients find themselves under investigation by Chinese authorities, according to Kedl. Sébastien J. Evrard, a partner at the Jones Day law firm in Hong Kong, said he’s seen a spike in demand for antitrust advice over the last year, with companies re-checking pricing and corporate relationships.

While antitrust cases are pursued by the Justice Department and the Federal Trade Commission in the U.S., and the European Commission in that region, oversight in China has been split into three since its anti-monopoly law went into effect in 2008. Cases fall under NDRC jurisdiction when involving prices, the Ministry of Commerce assesses the legality of mergers and acquisitions, and other anti-competition cases fall under the SAIC.

Oversight triumvirate

Faxes sent to the NDRC, Ministry of Commerce and SAIC went unanswered.

That said, having a triumvirate can be confusing as the boundaries between each agency can be obscure, said Akira Moriwaki, the chief representative in Shanghai at the law firm of Anderson Mori & Tomotsune.

“There’s a lack of transparency in law enforcement,” said Moriwaki. Whistle-blowers “won’t even know where to go to,” he said.

It’s more than just antitrust. Technology companies have been under fire after last year’s revelations by former contractor Edward Snowden of a National Security Agency spying program and the U.S. indictment in May of Chinese military officials on cyberspying claims.

State secrets

The following month, a commentary on the People’s Daily’s microblog said Apple, Microsoft, Google Inc. (GOOG) and Facebook Inc. (FB) cooperated in a secret U.S. program to monitor China. CCTV has broadcast that iPhone software could be used to help steal state secrets -- allegations Apple has denied -- and people familiar with the matter said this month that China’s procurement agency recently told government departments to stop buying antivirus software from Symantec Corp. (SYMC) and Kaspersky Lab because of security concerns.

Then there was the October campaign by Chinese state media accusing Starbucks Corp. of charging too much for coffee and saying Samsung Electronics Co. (005930)’s smartphones didn’t work. Samsung later apologized to Chinese customers, while Starbucks received an outpouring of consumer support after the reports. GlaxoSmithKline Plc (GSK), the U.K. drugmaker, has been under investigation for bribery in China since last year.

Food scandal

More recently, a scandal erupted in July for some of the world’s best-known food chains -- including McDonald’s Corp. (MCD), Yum! Brands Inc.’s KFC and Pizza Hut -- after Chinese TV reported that they used meat past expiration dates from the local unit of OSI Group Inc. The Shanghai government has since ordered McDonald’s, Yum Brands, Burger King Worldwide Inc. (BKW) and other foreign restaurant chains to disclose their product sources as the city seeks to regain consumer trust.

And while the U.S. Chamber of Commerce warns that China is losing its appeal as the top investment destination for American companies, China says concerns of a coordinated attack are unfounded.

“Fears that China, once the hottest growth market for Western firms, is turning chillier are totally misplaced,” China’s official Xinhua News Agency said in an unsigned commentary on July 30. “No company is allowed to break laws with impunity in China, be it Chinese or foreign, state-owned or private.”

No xenophobia

In its July 30 commentary, Xinhua cited antitrust investigations of China Telecom Corp. (728) and China Unicom (762) (Hong Kong) Ltd., fines for liquor makers Kweichow Moutai Co. (600519) and Wuliangye Yibin Co. (000858) and local jewelry makers as examples of how the government has subjected local companies to scrutiny.

Foreign companies will continue to be treated equally as local companies and welcomed by China to develop various forms of cooperation, Ministry of Commerce spokesman Shen Danyang said in a statement this month. However, foreign investors must strictly abide by Chinese laws and discharge their social responsibilities, especially concerning food safety.

Some global companies are retreating: Revlon Inc. (REV), the cosmetics maker, said in late December it will cease operations and eliminate about 1,100 positions in China. Japanese dairy company Meiji Holdings Inc. in October announced it would pull out of China after 20 years in the country.

“In the past China tended to give a little favor to foreign companies,” said Bo Zhiyue, senior research fellow at the National University of Singapore’s East Asia Institute and author of several books on China’s elite politics. “Foreign companies have to unlearn what they have learned and they have to relearn how to make it work in China.”